In Alabama, real property taxes are assessed at the state, county and municipal levels. State law exempts homeowners over 65 from state property taxes. These homeowners may be exempt from some or all of their county or municipal property taxes as well if they qualify for a homestead or primary residence exemption.
Homestead Exemption
Alabama law defines a homestead as a single-family home and up to 160 acres of land where the owners of the property live. The amount of a property's assessed value exempt from county property taxes under the homestead exemption depends on the owner's income.
As of publication, if a homeowner over 65 has an adjusted gross income of greater than $12,000 on his most recent state tax return, then up to $2,000 of his property's assessed value is exempt from county property taxes. Property owners in this bracket are still responsible for county school taxes. If the property owner earned less than $12,000, his exemption increases to $5,000 and he is not responsible for county school taxes.
If the homeowner's combined taxable income on his most recent federal income tax return is less than $12,000 a year, he is exempt from state and county property taxes.
Principle Residence Exemption
Homeowners over 65 who have an adjusted gross income on their most recent state income tax return of $12,000 or less can claim a principle residence exemption from all county and municipal property taxes, regardless of the assessed value of their property. This exemption also applies to property owners who are permanently and totally disabled, regardless of age.